Siemens Organizational Structure: The Hard Task of Restructuring

Siemens Organizational Structure: The Hard Task of Restructuring

Nour AlHoda Al-Rifai

201405839

Organizational Behavior

December 6th, 2016

Qatar University

Siemens Organizational Structure: The Hard Task of Restructuring

Organizations are always thriving to prosper and they do whatever it takes to be profitable, even if it took them to change the whole organization. Organizational change is a process where organizations change their strategies, cultures, structures, technologies and how they operate. Obviously, change is not easy and it takes a lot of time and it is not guaranteed to be successful. In order for a change to be successful, the internal and external environment need to be carefully studied. Taking Siemens as an example of organizational change, the ups and downs that the organization faced will be discussed. Why did Kleinfeld fail but somehow Löscher managed to succeed?

When Kleinfeld was assigned CEO of Siemens, he took this as an advantage to make changes throughout the company where he aimed for changing the structure of the organization and for decisions to be easily made. Kleinfeld wanted to transform the Siemens’ structure to more of an organic one. His efforts at restructuring the organization indicated that the employees at Siemens were uncomfortable and afraid of change difficulties of restructuring organizations causes some people to be uncomfortable with change. The massive change by Kleinfeld has left people in shock and many of them were not willing to adapt to these changes; which was why, as stated in the reading, groups of employees gathered to protest against this change. There are many factors that could have been the reason for this resistance to change. For example, perception and the fear of the unknown, some people cannot accept the reasons of change or see the positivity of it. Another factor could be threats to power and influence, meaning that some felt that this change will affect their powerful positions. Moreover, employees may have low trust in the company or the CEO and believe that they cannot manage the change. We can conclude that these employees did not care about the company improving as much as they cared about themselves and how this drastic change would affect them. Kleinfeld’s failed because he went in and quickly transformed the organization without studying his plan well. Moreover, he should have taken careful and slow steps when making the change.

Based on the information in the reading, Löscher’s efforts to change did not create controversy like Kleinfeld did, and there are many reasons that support why that happened. Kleinfeld was thinking with his American mind and wanted to transform the organization’s culture that Germans are not used to, on the other hand, Löscher was more supportive of German employees. When Löscher took over the organization, it took him a while to decide whether to change or not. Apparently Löscher had made the decision to change with careful consideration, unlike Kleinfeld, the changes were not made all at once. Löscher knew how the employees reacted to Kleinfeld’s changing attempts and he did not want that to happen again, so he made some decisions about who to keep and who to let go. People might have had aggressive reactions towards Kleinfeld attempts to change and did not give him a chance to continue with his plan. However, when it came into Löscher's hands to make the change, he went with downsizing and many underperforming employees lost their jobs and could not live through the change. Although Löscher's attempts were hard to achieve and the company had several losses, he managed to make the company’s profits go up again and recognized Siemens’ operations geographically.

For some people, readers could conclude from this case that restructuring efforts do not improve a company's financial performance. However, there are multiple reasons that can prove this statement wrong. Organizations change for growth opportunities, to meet the market needs, or to follow up with the advanced technology. When it comes to changing an organization, there are many things that should be kept in mind. First of all, an organization undergoes change when it wants to be more profitable but that does not mean that all attempts succeed. In order for the change to be successful, we must realize why and what do we want to change. Also, we must identify the approaches we will follow to make the change. An effective change management should exist by which employees are motivated to overcome the resistance to change and be more ready for it, where a vision must be created to build commitment and draws a future picture of where the company should be. Moreover, the development of political support in which beneficial relationships are created, and managing the transition. Last but not least, forces to support change and to withstand resistance must be created. In our case, unlike Löscher, Kleinfeld could not meet the lines of German corporate vision when restructuring. In conclusion, it is not that efforts to change do not improve the financial performance of an organization, it is more about the steps taken to make the change. We must always believe that there is always room for improvement and we just need to follow the right path in achieving it.